Which of the following would be an example of a moral hazard problem?
Examples of moral hazard include: Comprehensive insurance policies decrease the incentive to take care of your possessions. Governments promising to bail out loss-making banks can encourage banks to take greater risks.
What are some of the methods used by insurance companies to reduce moral hazard quizlet?
moral hazard and adverse selection. How do insurance companies reduce the risk of moral hazard? One strategy insurance companies have adopted to reduce moral hazard is to require an injured party to pay a_____________ .
When a nation is in a debt crisis the government’s level of debt is so high that quizlet?
Chronic budget deficits can be attributed to: voters wanting government programs but not wanting to pay taxes. When a nation is in a debt crisis, the government’s level of debt is so high that: the government is unable to find willing lenders so it can continue borrowing.
What are the downsides of government debt?
CBO: Consequences of a Growing National Debt
- Lower national savings and income.
- Higher interest payments, leading to large tax hikes and spending cuts.
- Decreased ability to respond to problems.
- Greater risk of a fiscal crisis.
Which of the following is a key difference between the economic activities of government and those of private firms?
Which of the following is a key difference between the economic activities of government and those of private firms? Government has the legal right to force people to do things; private firms do not. The government’s ability to coerce can enhance economic efficiency by: correcting market failures.
Which of the following will tend to socialize losses and privatize gains?
Government loan guarantees tend to have the effect of: socializing losses and privatizing gains.
What is the main problem with government guarantees that socialize losses and privatize gains?
What is the main problem with government guarantees that socialize losses and privatize gains? They encourage overly risky investments by insulating private investors from any losses.
How does governments power to coerce behavior tend to reduce private sector risk?
How does government’s power to coerce behavior tend to reduce private-sector risk? By enforcing contracts and discouraging illegal behavior that threatens private property. It does not help resource allocation, as there are no competitive forces within government that automatically direct resources to their best uses.
Which of the following is an activity of government that is not an activity of private firms?
Which of the following is an activity of government that is not an activity of private firms? Enforcing involuntary transactions. The governments ability to coerce can enhance economic efficiency by: Correcting market failures.
Which of the following is most closely related to recessions?
Which of the following is most closely related to recessions? Negative real growth in output.
What are the three statistics that are the main focus for those measuring macroeconomic health?
The three statistics that are the main focus for those measuring macroeconomic health are: real GDP, inflation, and unemployment.
Which of the following roles does the government fulfill in the economy?
The government (1) provides the legal and social framework within which the economy operates, (2) maintains competition in the marketplace, (3) provides public goods and services, (4) redistributes income, (5) cor- rects for externalities, and (6) takes certain actions to stabilize the economy.
What are some state obligations?
States must take responsibility for areas such as:
- ownership of property.
- education of inhabitants.
- implementation of welfare and other benefits programs and distribution of aid.
- protecting people from local threats.
- maintaining a justice system.
- setting up local governments such as counties and municipalities.
What do think are the obligations of the state to human rights?
The obligation to protect requires States to interfere in order to protect individuals and groups against human rights abuses by others, in particular private, actors. obligation to fulfil means that States must take positive measures to facilitate the enjoyment of human rights.